Shanghai, Fujian FTZs explore ways of reform based on local conditions

China currently already has 11 pilot free trade zones, forming a "Wild Goose Queue" pattern of "1+3+7", after three rounds of approval by the State Council in 2013, 2014, and 2017. In East China, the Shanghai and Fujian free trade zones have gradually formed development patterns of their own characteristics after years of exploration. Many of their innovative measures have been promoted across the nation. So, how do the two areas adjust measures to their local conditions to achieve maximum effect?

Shanghai: taking advantage of its status as an international metropolis to act as a pioneer

The State Council approved the setting up of China (Shanghai) Pilot Free Trade Zone in Aug 22, 2013. After running the FTZ for more than four years, Shanghai has gained rich experience in free trade zone (FTZ) construction and carried out countless innovative measures. The international metropolis also aims to align itself with role models such as Singapore, Hong Kong, and Dubai, using its comprehensive advantages to build a free trade port with Shanghai's characteristics.

The difference between free trade port and free trade zone is that the construction of free trade port will require higher standards, newer pilot areas, and further opening up. Currently, many local governments on the Chinese mainland are working on launching free trade ports, and Shanghai has yet again become a pioneer. The Ministry of Commerce declared not long ago that the study on building Shanghai free trade port has begun.

Shanghai's construction plan mentioned that the free trade port will be aligned with the world's highest standards and stricter trade supervision system. It will launch intensive management system under the authorization of the country, explore internationally-accepted finance, foreign exchange, investment, and exit and entry management systems, and build and improve risk prevention and control system.

The Plan to Deepen the Reform and Opening Up of China (Shanghai) Pilot Free Trade Zone issued by the State Council in March 2017 has proposed the launch of free trade port areas at special customs oversight areas such as Shanghai Yangshan Bonded Port Area and Shanghai Pudong Airport Comprehensive Bonded Area. It is also said that Shanghai is considering learning from the practices of Hong Kong, Singapore, and Dubai to set up a special area that is "inside the national border but outside the customs territory", easing control on the first line, strengthening control on the second line, and encouraging free trade in the area.

Additionally, Shanghai's free trade port areas will use information technology-based supervision methods to cancel or maximally simplify trade control of imported goods and customs declaration procedures on the premise of having effective control of port risks.

Fujian: using its geographical advantage of being close to Taiwan to promote cross-Straits economic and trade development

The "Straits" is a big advantage of Fujian to promote its free trade zone. The China (Fujian) Pilot Free Trade Zone was inaugurated on Dec 12, 2014, and focuses on using its geographical advantage of being close to Taiwan to promote cross-Straits economic and social development. Over the past three years, Fujian free trade zone has developed itself into a significant platform to push cross-Straits economic and trade development, due to the launching of various preferential policies to support free trade.

The FTZ has helped deepen Fujian-Taiwan industrial cooperation. During the period from its inauguration to last August, the FTZ has added 1,800 Taiwan-funded enterprises and $5.57 billion dollars of contractual investment from Taiwan, far more than the total size prior to its inauguration.

In February 2015, KMTC Cross-Straits Advanced Material R&D Cooperation Center was established in the Fuzhou area of Fujian FTZ and brought in 15 talented researchers from Taiwan. The center focuses on the R&D of the glass material for touch screen, LCD-used baseplate glass material, chemically-enhanced glass technology, 3D glass molding technology, antimicrobial glass, and other technologies. Over the past years, the center has applied 25 national patents, of which five have been approved. Products such as aluminosilicate cover glass, antimicrobial glass, and 3D screen protector co-developed by cross-Straits researchers have been produced and taken the lead in the industry. The products also help promote the development of its upstream-downstream industries such as electronic information and optical instrument.

In September 2015, Taiwan's Standard Foods landed a sunflower seed oil project in the Xiamen area of Fujian FTZ. The project benefited from the negative list management model and started production in May 2017 with an annual output value of 4 billion yuan ($630.48 million).

In November 2015, three Taiwan-funded joint venture travel agencies including Lvmama (Fuzhou), Lion (Fujian), and Tourking, received the approval from the China National Tourism Administration to start trial operation of the group travel business of Fujian residents to Taiwan. In the recent two years, more than 600 such travel groups have been organized, helping over 20,000 Fujian residents visit Taiwan.

With the help of Fujian free trade zone, Fujian-Taiwan industrial cooperation continues to march forward.

The customs clearance of Taiwan commodities has become increasingly convenient due to the improvement of policies in Fujian FTZ. More and more Taiwan commodities enter the Chinese mainland via Fujian FTZ because of the convenient and low-cost customs clearance.

The launch of a cross-Straits inspection and quarantine data exchange center made the bilateral connection and real-time transmission of customs data between Fujian FTZ and Taiwan possible, which will cut down seven workdays for the import of Taiwan commodities. The procedure of submitting the certificate of origin was also simplified. The paper version of the certificate isn't required after the Fujian customs receiving electronic ones from its Taiwan counterpart. This paperless customs clearance model between Fujian and Taiwan solves the problem of commodity arriving but the certificate not arriving. The lab test for Taiwan-produced consumer goods such as diapers and clothes can be avoided when they provide test results given by testing organizations recognized by the Taiwan Accreditation Foundation …… The launch of various trade facilitation measures attracts Taiwan commodities to enter the mainland's market via Fujian ports.

Statistics showed that 90 percent of fruits imported from Taiwan entered the mainland via Fujian ports and the import and export trade ratio between Fujian and Taiwan increased by 24.3 percent in the first half of 2017.